Reuters: US Dollar Report: GLOBAL MARKETS-Upbeat earnings buoy stocks; euro weakens

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GLOBAL MARKETS-Upbeat earnings buoy stocks; euro weakens Jul 19th 2012, 14:00 Thu Jul 19, 2012 10:00am EDT * European shares at 15-week highs on earnings * Spanish 10-year yields hit 7 pct after debt auction * Oil prices firmer on Mideast tension By Wanfeng Zhou NEW YORK, July 19 (Reuters) - Global shares climbed to two-week highs on Thursday as strong corporate earnings boosted sentiment but a spike in Spanish borrowing costs to danger levels capped gains and drove the euro broadly lower. Oil prices rallied, with London Brent crude rising above $107 a barrel as Middle East tension stoked concern about supply. U.S. stocks opened higher, a day after the S&P 500 index hit its highest level since May. The rally has largely been driven by corporate earnings, and investors were cheered by IBM's move to raise its full-year profit forecast late on Wednesday. "What IBM did, and what other companies are indicating, is that earnings will not be as poor as people felt was possible," said Rick Meckler, who helps oversee $2 billion as president of LibertyView Capital Management in New York. "When you see earnings hold up in a weakening economy, that allows stocks to keep their momentum and suggests these companies could really advance when the economy picks up." The Dow Jones industrial average rose 33.94 points, or 0.26 percent, to 12,942.64. The S&P 500 Index gained 4.07 points, or 0.30 percent, to 1,376.85. The Nasdaq Composite Index advanced 21.11 points, or 0.72 percent, to 2,963.71. The MSCI world equity index gained 0.76 percent to 314.96. European shares hit a 15-week high after strong results from Electrolux and AkzoNobel. But several warnings from companies about a challenging economic outlook and a sharp rise in Spanish government bond yields kept sentiment jittery. Ten-year Spanish bond yields rose above the 7 percent line seen as unsustainable, after the country paid euro-era record yields for five-year funding as investors remain concerned about its finances and growth prospects. "The risk is that yields could start rising also in shorter maturities, where Spain is doing most of the funding, and that will basically be game over for Spain," said Gianluca Ziglio, a strategist at UBS. Germany warned Spain's financial troubles are far from over and its government should be ultimately responsible for European aid to its banks. Ahead of a German parliamentary vote on aid for Spanish banks, Finance Minister Wolfgang Schaeuble said the mere perception of insolvency risk in Spain could cause contagion in the euro zone. The euro fell 0.4 percent to $1.2241. It also lost 0.6 percent to 96.24 yen and hit a record low against the Australian dollar. Brent crude gained for a seventh straight day, rising $1.71 to $106.87 a barrel after an earlier high of $107.48. U.S. oil gained $1.49 to $91.36. The killing of several Syrian security chiefs on Wednesday, and a deadly attack on Israeli tourists in Bulgaria, which Israel accused Iran of carrying out, worsened the crisis in the Middle East, the source of more than a quarter of the world's oil. The benchmark 10-year U.S. Treasury note was down 6/32, with the yield at 1.5128 percent. Link this Share this Digg this Email Reprints

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